SB 140: "An Act creating the Arctic infrastructure development program and fund in the Alaska Industrial Development and Export Authority."
00 SENATE BILL NO. 140 01 "An Act creating the Arctic infrastructure development program and fund in the 02 Alaska Industrial Development and Export Authority." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 44.88.159(a) is amended to read: 05 (a) The interest rate on a loan purchased from the proceeds of tax-exempt 06 bonds secured by the Alaska Industrial Development and Export Authority sustainable 07 energy transmission and supply development fund (AS 44.88.660) under 08 AS 44.88.650 - 44.88.690 or by the Arctic infrastructure development fund 09 (AS 44.88.810) under AS 44.88.800 - 44.88.840 or a loan participation purchased 10 from the proceeds of tax-exempt bonds or expected by the authority to be purchased 11 from the proceeds of tax-exempt bonds under AS 44.88.155 shall be determined under 12 the regulations adopted by the authority under AS 44.88.085(g)(2)(C) and shall be not 13 less than the cost of funds to the authority. In this subsection, "cost of funds" means 14 the true interest cost expressed as a rate on tax-exempt bonds of the authority plus an
01 additional percentage as determined by the authority to represent the allocable 02 expenses of operation, costs of issuance, and loan servicing costs. 03 * Sec. 2. AS 44.88.159(b) is amended to read: 04 (b) The interest rate on a loan purchased from the proceeds of taxable bonds 05 secured by the Alaska Industrial Development and Export Authority sustainable 06 energy transmission and supply development fund (AS 44.88.660) under 07 AS 44.88.650 - 44.88.690 or by the Arctic infrastructure development fund 08 (AS 44.88.810) under AS 44.88.800 - 44.88.840 or a loan participation purchased 09 from the proceeds of taxable bonds under AS 44.88.155 or expected by the authority 10 to be purchased from the proceeds of taxable bonds under AS 44.88.155 shall be 11 determined under the regulations adopted by the authority under 12 AS 44.88.085(g)(2)(C) and shall be not less than the cost of funds to the authority. In 13 this subsection, "cost of funds" means the true interest cost expressed as a rate on 14 taxable bonds, plus an additional percentage as determined by the authority to 15 represent the allocable expenses of operation, costs of issuance, and loan servicing 16 costs. 17 * Sec. 3. AS 44.88.159(d) is amended to read: 18 (d) The provisions of this section apply only to a loan participation purchased 19 under AS 44.88.155 - 44.88.159 or to a loan made under AS 44.88.650 - 44.88.690 or 20 44.88.800 - 44.88.840. 21 * Sec. 4. AS 44.88.159(e) is amended to read: 22 (e) The interest rate on a loan made under AS 44.88.650 - 44.88.690 or 23 44.88.800 - 44.88.840 or a loan participation purchased directly from the assets of the 24 authority shall be determined under the regulations adopted by the authority under 25 AS 44.88.085(g)(2)(C) and shall be not less than the total of a percentage as 26 determined by the authority to represent the allocable expenses of operation and costs 27 of loan origination and servicing, plus the cost of funds. In this subsection, 28 (1) "comparable financial security" means a type or category of 29 financial security the authority identifies in the regulations adopted by the authority 30 under AS 44.88.085(g)(2)(C) that has a term and financial conditions comparable to 31 the term and financial conditions of a loan participation or a loan made under
01 AS 44.88.650 - 44.88.690 or 44.88.800 - 44.88.840 and for which a regularly 02 published, nationally recognized market index is available; 03 (2) "cost of funds" means the earnings, expressed as an annual interest 04 rate, the authority would receive on a comparable financial security, and, for a loan 05 participation or a loan made under AS 44.88.650 - 44.88.690 or 44.88.800 - 44.88.840 06 with a fixed interest rate, the cost of funds must equal or exceed the minimum interest 07 rate; 08 (3) "minimum interest rate" means the five-year return on investment 09 funds of the authority, expressed as an annual interest rate, achieved by all internal and 10 external investment managers of the authority combined. 11 * Sec. 5. AS 44.88.159(f) is amended to read: 12 (f) In determining an interest rate under the regulations adopted by the 13 authority under AS 44.88.085(g)(2)(C), the authority may determine to disregard the 14 minimum interest rate required under (a), (b), or (e) of this section for a loan 15 participation purchased by the authority or a loan made under AS 44.88.650 - 16 44.88.690 or 44.88.800 - 44.88.840 to resolve lending limits or reserve restrictions 17 imposed on the financial institution and may instead determine to retain the interest 18 rate existing at the time the authority makes the loan or purchases the authority's loan 19 participation. 20 * Sec. 6. AS 44.88.159(g) is amended to read: 21 (g) The authority may, in the regulations adopted by the authority under 22 AS 44.88.085(g)(2)(C), establish a program to pay to borrowers of loan participations 23 determined by the authority to meet sufficient job creation, rural development, Arctic 24 infrastructure development, renewable energy development, or other economic 25 development criteria incentive rate rebates of not more than one percent of the interest 26 rate charged on the authority's portion of a loan participation. The following standards 27 apply to the program: 28 (1) the payment of an incentive rate rebate may reduce the interest rate 29 to a rate that is less than the minimum interest rate required under (a), (b), or (e) of this 30 section; 31 (2) the authority may not commit to pay an incentive rate rebate for a
01 proposed loan participation if the total of the amount of the proposed loan 02 participation plus the combined outstanding balance of all loan participations for 03 which the authority has committed to pay incentive rate rebates would exceed five 04 percent of the total of the amount of the proposed loan participation plus the combined 05 outstanding balance of all loan participations of the authority; 06 (3) an incentive rate rebate may not accrue for more than five years 07 after the date the loan participation is purchased; 08 (4) the authority may establish a separate account for the incentive rate 09 rebate program. 10 * Sec. 7. AS 44.88 is amended by adding new sections to read: 11 Article 9A. Arctic Infrastructure Development. 12 Sec. 44.88.800. Arctic infrastructure development program. The Arctic 13 infrastructure development program is created in the authority to promote and provide 14 financing for Arctic infrastructure development. 15 Sec. 44.88.810. Arctic infrastructure development fund. The Arctic 16 infrastructure development fund is established in the authority. The fund consists of 17 appropriations made to the fund by the legislature, money or other assets transferred to 18 the fund by the authority, and unrestricted loan repayments, interest, or other income 19 earned on loans, investments, or assets of the fund. The fund is not an account in the 20 revolving fund established in AS 44.88.060, and the authority shall account for the 21 fund separately from the revolving fund. The authority may create additional accounts 22 in the fund. Subject to agreements made with the holders of the authority's bonds or 23 with other persons, the authority may transfer amounts in an account in the fund to 24 another account in the fund. Amounts deposited in the fund may be pledged to the 25 payment of bonds of the authority or expended for the purposes of AS 44.88.800 - 26 44.88.840. The authority has the powers and responsibilities established in 27 AS 37.10.071 with respect to the investment of amounts held in the fund. 28 Sec. 44.88.820. Use of fund balance. Subject to the requirements of 29 AS 44.88.800 - 44.88.840, the authority may use money in the Arctic infrastructure 30 development fund (AS 44.88.810) for Arctic infrastructure development. 31 Sec. 44.88.830. Qualified infrastructure development; powers and duties
01 of the authority. (a) Subject to the limitations of AS 44.88.840, for Arctic 02 infrastructure development the authority may 03 (1) use the Arctic infrastructure development fund (AS 44.88.810) to 04 finance Arctic infrastructure development, insure project obligations, guarantee loans 05 or bonds, and establish reserves; 06 (2) acquire real or personal property by purchase, transfer, or 07 foreclosure when the acquisition is necessary to protect the authority's interest in 08 financing; 09 (3) defer principal payments or capitalize interest on Arctic 10 infrastructure development; 11 (4) subject to AS 36.30.085(e), enter into lease agreements, sales- 12 lease-back agreements, build-operate-transfer and operate-transfer agreements, or any 13 similar project financing agreement for a qualified Arctic infrastructure development; 14 (5) enter into agreements with government entities for the transfer and 15 control of infrastructure, facilities, rights-of-way, and studies; 16 (6) contract for services with a professional advisor, including an 17 attorney, bond counsel, engineer, or other technical expert necessary to fulfill the 18 purposes of the program; and 19 (7) subject to AS 44.88.090, borrow money and issue bonds. 20 (b) The authority shall adopt regulations to implement AS 44.88.800 - 21 44.88.840, including 22 (1) an application process for acquiring financing under this section; 23 (2) qualifications for Arctic infrastructure development projects 24 applying for financing under this section; and 25 (3) fiscal controls and accounting procedures for the fund. 26 Sec. 44.88.840. Limitations on financing. (a) Unless the authority has 27 obtained legislative approval by law, the authority may not use the Arctic 28 infrastructure development fund established in AS 44.88.810 to make 29 (1) a loan for more than one-third of the capital cost of an Arctic 30 infrastructure development; or 31 (2) a loan guarantee if the amount of the guarantee exceeds
01 $20,000,000. 02 (b) Financing under AS 44.88.830 is limited to the projected life of the Arctic 03 infrastructure development, which may not be more than 30 years. 04 (c) Notwithstanding (a) of this section, the authority may use the Arctic 05 infrastructure development fund established in AS 44.88.810 as security for a bond 06 guarantee. 07 * Sec. 8. AS 44.88.900 is amended by adding new paragraphs to read: 08 (18) "Arctic" means the area of the state north of the Arctic Circle, 09 north and west of the boundary formed by the Porcupine, Yukon, and Kuskokwim 10 Rivers, all contiguous seas, including the Arctic Ocean, and the Beaufort, Bering, and 11 Chukchi Seas, and the Aleutian Chain; 12 (19) "Arctic infrastructure development" means the construction, 13 improvement, rehabilitation, or expansion in the Arctic of a port, road, energy project, 14 hangar, or facility to aid in development or meet emergency response needs.